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Exercise 4 Suppose that an asset has prices P0 = $4.00, P1 = $4.80, P2 = $5.00, and P3 = $5.40 and dividends D1 =

Exercise 4

Suppose that an asset has prices P0 = $4.00, P1 = $4.80, P2 = $5.00, and P3 = $5.40 and dividends D1 = 0, D2 = 0.40, and D3 = 0. Find the corresponding returns.

Exercise 5

For the asset prices and dividends given in Exercise 4, compute the adjusted prices.

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